Why That Great Interview Didn't Land You a Job: Recruitment Intensity Rates and Mass Unemployment

The problem with the labor market isn't that the unemployed aren't looking for work -- it's that employers aren't looking very hard for workers.

Have you, or someone you know, had a great job interview and wound up wondering why, months and months later, there's been no offer and the job remains open? The job opening is on the firm's web page, you are perfect for the spot, but you aren't getting any responses, either for an interview or for post-interview interest. I know many people this has happened to -- so many that I've been wondering if it is quantifiable and generalizable.

We have a lot of ways to observe how the unemployed behave. We have detailed information on the duration of unemployment, lots of economists fretting over whether unemployment insurance keeps people from taking jobs, sophisticated models trying to understand their search behaviors, etc. But none of that mental framework exists for employers and job openings. (A cynic might note that economics, as practiced, is a machine for observing and disciplining labor.)

Luckily, a group of economists has put something together that adds significantly to the debates over structural unemployment. Jason Faberman and Bhash Mazumder at the Federal Reserve Bank of Chicago put out a report last month asking "Is There a Skills Mismatch in the Labor Market?" Their answer: "we find limited evidence of skills mismatch." In other words, not really.

They reference work that looks fascinating by Steven Davis of the University of Chicago, R. Jason Faberman of the Federal Reserve Bank of Chicago, and John Haltiwanger of the University of Maryland. Those researchers "find that employers were able to fill jobs relatively easily during the recession, but that their measure of recruiting intensity per vacancy, which captures a variety of efforts employers put into recruiting, remained low well after the end of the recession. One can interpret this as employers imposing relatively high hiring standards despite the abundance of available workers."

Recruitment intensity hovers around the 1.0 index through the 2000s, until the recession starts in 2007. In the Great Recession, the recruitment intensity collapses and never recovers going into the end of 2011. What does it mean for recruitment intensity to fall? This recruitment intensity, according to the research, "is shorthand for the other instruments employers use to influence the pace of new hires – e.g., advertising expenditures, screening methods, hiring standards, and the attractiveness of compensation packages. These instruments affect the number and quality of applicants per vacancy, the speed of applicant processing, and the acceptance rate of job offers." This margin for trying to fill jobs is ignored, or assumed away, in most of the major economic models of unemployment and hiring.

The collapse of recruitment intensity helps us understand several things. First, the issue of how job openings are increasing while wages aren't. The research notes that "[i]ncorporating a role for the recruiting intensity index also improves the stability of the Beveridge Curve and yields a better fit to data on the job-finding rate for unemployed workers." This helps us understand some small movements in job openings in the Beveridge Curve while other measures of supply-constraints in the labor market aren't going off.

The second issue it helps us understand is a common media story we see -- the story of the boss who complains about the workforce but doesn't want to raise wages. Dean Baker likes topoint out these stories as lacking economic sense. This shows that employers not trying very hard to fill empty jobs, even on non-wage margins, is a general phenomenon.

Finally, it explains why you or your friends and loved ones are having such a hard time finding a job even when you see advertisements for a perfect job that never seems to be filled. It is probably not much comfort to understand that this is a national phenomenon, one we have the tools to fix but that Republicans in Congress, bank regulators, and the FOMC are not willing to address.